What do the 10 biggest companies in the world have in common?
It's a good question – and one that might give us some insights into what it takes for a company to have a truly global presence. After all, finding the 'next Amazon.com' or the 'next Apple' is the ultimate dream of most investors around the world.
So let's take a look at what the 10 largest companies in the world actually are before we get started. I'm going off the iShares Global 100 ETF (ASX: IOO) here, which tracks the S&P Global 100 Index and excludes companies from 'emerging markets' like China and Saudi Arabia. I think this is a good thing because although some companies from these kinds of countries are massive, it's hard to truly assess them as they often have significant government ownership, which can distort their valuations.
So, using the IOO ETF as a proxy, here are the S&P Global 100 Index's top 10 holdings:
- Microsoft
- Apple
- Amazon.com
- Alphabet
- Johnson & Johnson
- JPMorgan Chase & Co
- Nestle
- Procter & Gamble
- Intel Corporation
- Roche Holdings
So there you have it, the global top 10.
Now, what can we learn from these companies? Well, already I see some patterns. Half of this list are tech companies, and 8 out of 10 are American companies. Two are healthcare companies and two are consumer staples. And unlike the S&P/ASX 200 Index (ASX: XJO), there's only one bank here.
But let's dig a little deeper. I think it's fair to say that all of these companies are the best in their fields at making products we all need to work and live. And they cement this advantage through powerful brands.
Everyone knows Microsoft's Office and Windows products are unrivalled at what they do. And everyone knows how good Alphabet's Google search engine is.
Apple may have its fair share of haters, but you can't deny it's one of the most powerful brands on the planet. Meanwhile, Nestle's dominance in making foods and drinks permeates almost every country in the world.
You get the idea. All of these companies have gotten to where they are by doing what they do better than their competitors and distilling that advantage through brand power.
In my view, that's the kind of quality that makes a life-changing investment.
How we can apply these lessons to ASX shares
So how do we apply these lessons to our own ASX? Well, there are a few shares that I think are following this path in a very promising manner.
Xero Limited (ASX: XRO) is one. It's building a great brand across the world through its unique accounting software. The number of customers using Xero's products increased 26% in FY19 and by double-digits in each of its target markets.
Afterpay Ltd (ASX: APT) is another. It has managed to go from a niche Australian brand to a truly global player in the payments space in just a few years.
CSL Limited (ASX: CSL) has already become one of the world leaders in the blood and plasma medicines and vaccinations space. I think it has the potential to climb even further.
Finding your own Amazon is hard – but you can always look for the telltale signs and invest accordingly. Who knows, you might have some mean bragging rights in the future!
